United States v. Sturges et al.

the United States against Butler, as no person would bid for the same, so long as the property remains covered by the mortgage. And the bill seeks to have the mortgage cancelled and discharged of record, or the benefit thereof applied to the use of the United States, or such other relief as shall seem fit and proper.

The original bill was filed against Butler and Sturges only, and they answer separately.

Butler admits the execution of the mortgage, as stated in the bill; that he never received any consideration for it from Sturges; alleges, that the bond referred to in the mortgage was never delivered to Sturges, and denies that the mortgage was given for the purpose of securing Sturges; but alleges, that it was executed and recorded, and retained by him for upwards of two years, solely with the view of raising money upon it to pay off the judgments against him on the Minturn and Champlin bond; denies that at the time of executing the mortgage, or at any time since, he was indebted to Sturges: And he sets up, in discharge of his liability on the judgment in favour of the United States, that in the fall of the year 1819, Minturn and Champlin, the principals, were committed to prison on a capias ad satisfaciendum, and were afterwards discharged from imprisonment by the Secretary of the Treasury, without his consent.

Sturges, in his answer, admits the execution of the mortgage, but denies that it was given to secure him against the Minturn and Champlin debt exclusively, but that it was also intended to secure him for all monies owing to him by Butler, and for all other liabilities incurred by him for Butler, as well as for monies he might be compelled to pay on account of said bond; and alleges, that Butler was indebted to him in a large sum of money, and that he had become responsible

United States v. Sturges et al.

for him endorser of promissory notes, and acceptor of bills of exchange to a large amount; and also alleges, that he had been damnified by reason of his becoming security for Minturn and Champlin, and that his property had been sold and sacrificed under the judgment obtained against him: And also insists on the discharge of Minturn and Champlin by the Secretary of the Treasury, as in Butler's answer set forth. Sturges also sets up, that being indebted to Oliver Sturges and Benjamin Burroughs in the sum of fifteen thousand dollars, he on the 9th of October, in the year 1821, assigned the said mortgage to them in full and complete satisfaction of said debt, and was thereupon released and discharged by them from the said debt.

In consequence of the disclosure in the answer of Sturges, that the mortgage had been assigned to Sturges and Burroughs, a supplemental bill was filed against Burroughs, the surviving partner, calling upon him to answer the allegations in the bill, and set forth his knowledge in relation to the assignment, &c., and praying that said assignment might be delivered up to be cancelled, or such release executed by Burroughs, as survivor of Sturges and Burroughs, as might be deemed proper and necessary, to enable the United States to enforce their judgment against the mortgaged premises.

Burroughs, in his answer, alleges, that on the 9th of October, 1821, Josiah Sturges was indebted to Sturges and Burroughs in the sum of eighteen thousand eight hundred and sixty-six dollars: That the assignment of the mortgage was made in satisfaction of fifteen thousand dollars, part of the said sum so due from him: That the mortgage has not been transferred by him to any other person: That no part of the interest on the fifteen thousand dollars has been paid; and that the fifteen thousand dollars is now due and unpaid, except so far as it has been paid by the assignment of the mortgage, and

United States v. Sturges et al.

that he has no security except the said assignment; and denies any knowledge of the suits of the United States on the Minturn and Champlin bond, or of the judgments, or that the mortgage was executed to indemnify Josiah Sturges against said debt, or that Josiah Sturges was indebted to the United States; and avers that the assignment of the mortgage was executed bona fide by Josiah Sturges, to secure the debt of Sturges and Burroughs, and for no other purpose.

I have been thus particular in noticing the material allegations in the bill, and the admissions in the several answers, because it is upon these alone that whatever relief is given, must be founded so far as the rights of Butler or Sturges are concerned. No testimony has been taken in the cause that can vary such a result. Butler, one of the defendants, is the only witness examined on the part of the plaintiffs. The reading of his examination has been objected to on the ground of interest. The validity of this objection will be hereafter noticed, when I come to consider the cause as it relates to the rights of Burroughs. It is there alone it can be of any importance; for it is unavailing, so far as it contradicts the answer of Sturges. It is but the testimony of one witness, which will not outweigh the answer, asserting a fact responsive to the bill, there being no corroborating circumstances to take the case out of the general rule on this subject.

The rights and interests of the several defendants being somewhat at variance with each other, it becomes necessary to consider the case as it stands between the United States and each one separately. The effect and operation of the discharge of Minturn and Champlin from imprisonment by the Secretary of the Treasury, is a branch of the defence set up, both by Butler and Sturges, and will be afterwards considered.

United States v. Sturges et al.

In the first place then, as it respects Butler, he admits that he never received any consideration for the mortgage. That although it was duly executed and registered, it was retained by him, and was given solely with the view of enabling him to raise money upon it, to pay off the judgment of the United States against him upon the Minturn and Champlin bond. If no consideration was given by Sturges for the mortgage, it is either a mere nominal or a fraudulent encumbrance, and upon either ground cannot be upheld as any impediment to the obtaining satisfaction of the judgment of the United States. And if it was a bona fide transaction, intended for the purposes set out in Butler's answer, the United States were beneficially interested in the use to which it was to be applied. It was to raise money to satisfy their judgment; and Sturges, in this view of the case, would become the trustee of the judgment creditor. And although the mortgage is absolute upon the face of it, a Court of Equity may inquire into the real purpose for which it was given, and apply it to that use.a

The allegation in the bill is, that the mortgage was given by Butler to indemnify Sturges, his co-surety, against the bond entered into for Minturn and Champlin. Although the admission in Butler's answer does not support this allegation in terms, yet it is such as to warrant the granting of the relief prayed for, either to have the mortgage delivered up and cancelled of record, or that the mortgaged premises may be sold, and the proceeds applied towards payment of the judgment of the United States; and such application of the proceeds would operate by way of indemnity to Sturges. And besides, there is a general prayer for relief, under which any relief may be granted, which the proofs or admissions will warrant.

It is objected, however, that there is a want of equity apparent on the face of the bill in two particulars.

a 1 John. Ch. Moses r. Murgatroyd.

United States v. Sturges et al.

1. It seeks the aid of a Court of Equity against sureties, without showing that the United States have attempted to collect the debt of the principals, or alleging that they are insolvent.

2. The bill is filed to obtain the aid of a Court of Equity to enforce a judgment of a Court of Law, without showing that the United States have exhausted their legal remedy.

There are several answers to be given to these objections. If, admitting the charges or facts stated in the bill to be true, there is no foundation in equity for the relief prayed; it was a proper case for a demurrer, and the objection comes now with less weight than it would at an earlier stage of the proceedings. But admitting the first branch of the objection to be well founded in principle, it is waived, and the omission supplied by the answer, which shows, that the United States have attempted to collect the debt of the principals, Minturn and Champlin; that a judgment had been recovered against them, and execution issued, upon which they were imprisoned and discharged by the Secretary of the Treasury, under the act of Congress of the 6th of June, 1798, which could not have been done until it had been ascertained that they were insolvent, and unable to pay the debt. And it is to be presumed, that all the examination required by the act to be made by the Secretary of the Treasury, was made before he discharged them from imprisonment. At all events it does not lie in the mouth of the defendants, who set up this discharge as a part of their defence, to say it was not given pursuant to the requirements of the act of Congress.

The second branch of the objection is not supported by authority to the extent in which it is laid down. The rule seems to be, that if a judgment creditor wants relief in equity as to a chattel, he must show that he has taken out execution at law, and pursued it to every available extent, before he can

b 3 Vol. L. U. S. 54.